Calculate basic earnings per share from net income, preferred dividends and weighted-average common shares.
Formula
Basic EPS = (net income − preferred dividends) ÷ weighted-average common shares.
Example: $1,000,000 net income, no preferred dividends and 500,000 weighted-average shares gives EPS of 2.00.
Important
This is a basic EPS calculation. Diluted EPS can require options, convertible securities and other adjustments.